Clean buildings tax credit

The clean buildings tax credit is a refundable income tax credit for qualifying retrofits that improve the energy efficiency of eligible commercial and multi-unit residential buildings with four or more units. The retrofit must improve the energy efficiency of an eligible building and meet energy-use targets. The credit amount is 5 percent of qualifying expenditures paid on the retrofit.

You must make or incur the expenditures under the terms of an agreement entered into after February 22, 2022 and paid before April 1, 2025.

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Who can claim the tax credit

To claim the clean buildings tax credit you must be:

  • A corporation with a permanent establishment in B.C., or
  • An individual, including a trust, that:
    • Is resident in B.C., or
    • Is not resident in B.C. but has income earned in B.C. for income tax purposes.

You must meet these requirements in the tax year you are claiming the credit

Entities that are exempt from BC income tax are not eligible for the clean buildings tax credit.

Eligible buildings

To be eligible, the building being retrofitted must be located in B.C. and wholly consist of one or more of the following types:

  • A multi-unit residential building consisting of four or more dwellings
  • Accommodation (only includes buildings classified as class 6 property under the Assessment Act)
  • A college or university
  • Food services
  • Hospital
  • Logistics and warehousing
  • Long-term care
  • Offices
  • Retail – food
  • Retail – other
  • Schools
  • Other buildings classified as class 6 or class 8 property under the Assessment Act

Qualifying retrofits

A qualifying retrofit is an alteration or renovation of an eligible building that is:

The qualifying expenditures you incur as part of the retrofit are what’s used to calculate your tax credit amount.

Qualifying expenditures

Only the expenditures that are directly attributable to the retrofit qualify.

You must make or incur the expenditures under the terms of an agreement entered into after February 22, 2022 and paid before April 1, 2025. 

Keep in mind:

  • You can’t include expenditures that another person included in calculating their clean buildings tax credit. If you are a member of a partnership, you may include your appropriate portion of the partnership’s qualifying expenditures
  • The expenditure is reduced by any payments received under a program designed to provide assistance with the cost of alteration or renovation of the building or the land it is on

Examples of qualifying expenditures and exclusions are listed below. 

  • Heating, ventilation and air-conditioning systems
  • Fans
  • Interior and exterior lighting devices
  • Service water heating equipment
  • Pumps
  • Receptacle loads and miscellaneous equipment
  • Elevators and escalators
  • Building envelope, including improvement to the insulation
  • Permits required for, or for the rental of equipment used in the course of, the qualifying retrofit
  • Qualified person certifying the retrofit

The following expenditures do not qualify:

  • Expenditures that cannot reasonably be considered to have been made or incurred for the purpose of reducing energy use intensity (EUI)
  • Expenditures you made or incurred if you were paid to make the expenditure, for example, as the contractor performing the retrofit
  • Purchases or reacquisitions of items you previously leased or owned
  • Property that can be used independently of the qualifying retrofit, for example portable heaters
  • Household appliances
  • Electronics (home-entertainment)
  • Costs of annual, recurring, or routine repair, maintenance or service
  • Financing costs in respect of the retrofit
  • Goods or services provided by a person not dealing at arm's length with you, unless the person is registered for the purposes of Part IX of the Excise Tax Act (Canada)

 

Certifying your retrofit

Before you can claim the credit on your income tax return for the year, the retrofit must be certified with the Ministry of Finance. This is a two-step process you can start 12 months after the retrofit is finished.

The online forms for this process will be available April 2023. Subscribe to our What’s New in B.C. Income Taxes page to be notified when the forms go live.

To help you prepare, the process is outlined below.

Step 1: A qualified person submits information about the retrofit

The first step is hiring a qualified person to confirm the target energy use intensity and the energy use calculations of the building before and after the retrofit, showing that the retrofit has reduced energy usage below the target.

They submit this information to us by filling out an online form.

To complete the form, they’ll need:

  • Address of the building that received the retrofit
  • Parcel identification (PID) of the building
  • Type of building
  • Floor area of the building
  • Climate zone of the building
  • Type and amount of fuel or energy used by the building for a year ending within the 12 months before the retrofit began
  • Type and amount of fuel or energy used by the building for a year beginning after the retrofit is completed (and ending on or before March 31, 2027)
  • An electronic copy of their report containing:
    • information used to determine energy use intensity
    • certification that the retrofit has reduced the energy use intensity, and
    • a description of what the retrofit included

After they submit the information, they’ll receive a confirmation number to provide to you for Step 2.

Step 2: Eligible applicant applies for tax credit certificate

The next step is applying for the certificate by filling out an online form. Only one application can be submitted per retrofit. When you apply, include all qualified taxpayers who intend to claim the credit for that retrofit.

To complete the form, you’ll need:

  • Confirmation number from Step 1
  • Parcel identification (PID) of the building
  • Cost of the retrofit
  • Business Number (BN), last 4 digits of Social Insurance Number (SIN), or Trust Account Number (TAN) for all taxpayers claiming the credit
    • If there’s a multi-tiered partnership arrangement, you’ll need to provide the information for the partners
  • Full legal name of all taxpayers claiming the credit

Once approved, each taxpayer listed in the application will receive a letter with a unique certificate number and tax credit information they can use to claim the credit.

Claiming the credit

The clean buildings tax credit is claimed on your income tax return filed with the Canada Revenue Agency (CRA).

To claim the credit, you’ll enter your unique certificate number on your income tax return filed with the CRA.

You must claim the credit no later than 18 months after the end of the tax year after the tax year in which the retrofit was completed.

Legislation

The following legislation applies to the clean buildings tax credit: